Almost half of Americans not confident in their retirement plans

The upward trend in life expectancy has been evident for many years and yet still millions of Americans do little to plan for the large chunk of their lives that will live in retirement.

A survey from Western & Southern Financial Group is the latest to highlight a lack of professional planning – and therefore confidence – in retirement plans with inflation having added a new layer of concern.

For pre-retirees, their greatest fears are running out of money (70%), health care costs (57%), inflation (54%) and Social Security cuts (49%) while those already retired rank Social Security cuts as the largest concern (61%), followed by inflation (60%), running out of money (54%), and healthcare costs (46%).

Six in ten across all age groups do not have a financial professional, although a third are looking for one.

This should perhaps be higher on the agenda given that almost half of poll participants are only slightly or not at all confident in being able to manage their own investments throughout retirement. Women and those with low incomes are less confident in this regard.

"Sustaining one's desired retirement lifestyle requires a balancing act," said Jill McGruder, senior vice president and chief marketing officer at Western & Southern. "On one hand, it calls for producing ongoing income for ongoing expenses, both expected as well as unplanned. On the other hand, it demands protecting asset values from risks such as inflation, market volatility, increased health care spending and extended lifespan.”

FINANCIAL PLAN

The report reveals that more than 50% of those with a formal, written retirement plan are very or extremely confident in having enough retirement income.

However, just 41% of pre-retirees say they are knowledgeable about what retirement planning entails compared to 47% of retirees, although they are twice as concerned about it (26% of pre-retirees vs. 13% of retirees).

High-net-worth individuals are more than twice as knowledgeable of retirement income planning as their low net worth counterparts (57% vs. 24%).

ANNUITIES

The study found that the role that annuities play in retirement planning is one area that it not well understood:

• 65% of those who don't own an annuity have a neutral sentiment toward annuities.
• Annuity non-owners are also largely ambivalent regarding the pros and cons of annuities.
• The top three annuity company attributes annuity non-owners look for are financial strength, company reputation and financial professional recommendation.

"While fully eight in 10 of those surveyed believe income planning is necessary for retirement, only two-thirds agree that annuities can provide a protected lifetime income,” McGruder added. “Our role is to build greater understanding of an annuity's guaranteed benefits."